Unhappy second birthday

Well, two years on, nearly four thousand pubs and hundreds of clubs closed, many more holding on by their fingertips with the heart and soul ripped out of them, the promised hordes of eager non-smokers having totally failed to appear. What a great success story! As usual, Pete Robinson pulls no punches in his analysis of the situation.

He debunks the misleading claims that many pubs are thriving despite the ban, the claim that a majority of the public actually support it, and the myth of the “reserve army”:

Those people who never used pubs before the ban don't give a rats ass what changes you've made. Pubs still hold no attraction for them whatsoever and never will. So if you're banking on the 'New Breed' you'll be waiting a helluva long time.

He concludes:

We must stop blaming the customers for deserting our pubs and start listening to their concerns - then ACT upon them. Ignore the drinking classes at your peril.

Today the State has replaced the traditional pub landlord, and we've left the door open for swathes of ever more intrusive regulation. Compulsory CCTV cameras, authority approved seating plans, state-regulated drink volumes, orderly queuing systems, plastic glasses, special licences to play the spoons or visit the lavatory.

People want their “old” pubs back, warts an’ all. If they’d wanted health clubs they'd have joined a gymnasium. They want proper landlords, not social workers. They want good old-fashioned boozers where State scrutiny stops at the door.

The defeatists within the trade insist pubs must ‘evolve’, we can’t turn the clock back.

Pray they are wrong.

On the same subject, I was struck by this poignant montage of closed pubs in the North-West I was recently sent by blog reader “Visigoth”.

Freedom in ties

Now this is not yet another post saying how we need the tie to defend John Willie Lees’ dishwater masquerading as beer against the depredations of stuff from Pictish and Thornbridge that actually has hops in it.

But, quite frankly, from the point of view of free market economics, I really see nothing wrong in principle with the tie. If someone owns a pub that they wish to lease out to someone else on the basis that the lessee will exclusively buy and resell some products from the lessor, then why shouldn’t the two of them freely enter into that arrangement? Obviously there need to be safeguards against the abuse of power by the lessor, and against the establishment of local and national monopolies, but apart from that I don’t see the problem, and don’t regard it as stifling competition. The fact that there are so many thriving micro-breweries suggests the tie doesn’t in practice operate as a barrier to entry in the brewing industry.

This kind of arrangement is common in many other retail and service businesses – for example many fast food chains such as Subway, McDonalds and Domino’s Pizza are largely run on a franchise basis. Petrol stations are much the same. Car dealerships have exclusive relationships with manufacturers, yet nobody moans that you can’t buy Fords at a Vauxhall dealer. And surely any business, whether a Tesco or a Wetherspoon’s, that is directly managed, is effectively tied as the owning company dictates what is sold there.

Even if the tie was abolished, then it is hard to see how pub owners could be prevented from switching pubs over from tenancy to management or using a franchise model. Indeed the former is exactly how Sam Smiths’ run their pub estate – put every pub under management and have all products supplied centrally with virtually no purchasing discretion allowed to the manager. Without the tie, other forms of collective running and supplying of pubs would arise, and to imagine that it would result in 50,000 independent freetraders is pie in the sky. And, even if this could be achieved, it is questionable whether the atomisation of the market it would produce would really be to the benefit of consumers.

The problems of the giant pub companies really have little to do with the tie – they essentially stem from a flawed business model that was not resilient to an economic downturn and did not offer any distinctive identity to lessees. They will crumble and fall because of their own internal contradictions.

Out of sight, out of mind

Before too long, it is likely that retailers in the UK will be required to keep all tobacco products out of public view. Now, as a non-smoker, this does not concern me directly (although it certainly does indirectly), but it raises the question of exactly how people are supposed to establish what brands are on offer, and at what prices? Presumably they’ll be allowed to display a price list in a prescribed format, otherwise customers will be placed in a ridiculous position of trying to find out what’s available by a process of elimination.

It’s an interesting thought experiment to speculate on what effect this would have if applied to alcoholic drinks in pubs and off-licences. Gone would be the days of looking along a row of pumpclips or bottles on a shelf to see if there’s anything different you fancy. You would have to peruse a dry price list and then ask for something by name. The barperson would not even be able to answer the question “have you got anything interesting on today?” Inevitably, people would tend to ask for something they had bought there before or, if in an unfamiliar pub, something they’d heard of elsewhere, so the familiar would win out over the new.

And the role of promotion couldn’t be taken on by private citizens either. I’d probably be breaking the law now if I started going on here what a good smoke Benson & Hedges were, and how they were available for £5.79 for 20 at Faroukh’s Newsagents, even if it was purely a personal opinion and I received no payment for it, so I wouldn’t be able to sing the praises of Taylor’s Landlord either or tell people they could get it at the Jolly Plover. Which would also make the activities of CAMRA well-nigh impossible and the Good Beer Guide a banned volume.

Now, I'm not saying this is going to happen in the next ten years, or indeed ever. But it is by no means axiomatic, as many in the beer world seem to think, that restrictions on the advertising and promotion of alcoholic drinks, even those falling well short of a total ban, would favour small producers over big ones. Indeed I would say overall they would tend to prop up established players and well-known brands. If you can’t advertise products, effectively you can’t introduce new ones, so a market without advertising ends up being ossified.